Despite opposition from automakers in Europe, the EU decided to begin talks with Japan on the free-trade deal.
“We’re more than deeply skeptical. There’s not a single foreign [car] manufacturer in Japan, so there’s really no possibility to enter the market,” said Stephen Biegun, Ford vice president of international governmental affairs.
Although the European market is more protected that the Japanese market, as it has 10% tariff on imported cars from the Asian country and 22% on trucks, the EU automakers have many barriers to hinder exports. Japan still uses its own environmental and safety standards, rejecting the EU ones, which makes approvals time and money consuming. Then there is Japan’s ‘light’ cars category, which benefit from tax breaks, but those coming from the EU do not fit the requested criteria on power and size.
These rules affect especially Italy and France, two markets where automakers specialize in small cars and try to fight foreign competition among a domestic shrinking market. What Japan wants is the EU to remove tariffs on vehicles and other products, while the EU looks for scaling back non-tariffs barriers in Japan’s market.
The first formal talks are expected to take place in April and the EU trade negotiators have already been told to cease talks after a year if the Asian country doesn’t show willingness to take down its non-tariff barriers.